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Vonage Holdings Corp (NYSE:VG)
Beneish M-Score
-3.12 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Vonage Holdings Corp has a M-score of -3.12 suggests that the company is not a manipulator.

VG' s 10-Year Beneish M-Score Range
Min: -5.31   Max: 0.99
Current: -3.12

-5.31
0.99

During the past 13 years, the highest Beneish M-Score of Vonage Holdings Corp was 0.99. The lowest was -5.31. And the median was -3.03.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Vonage Holdings Corp for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 0.9103+0.528 * 0.9731+0.404 * 1.2345+0.892 * 1.0235+0.115 * 0.7298
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1097+4.679 * -0.1269-0.327 * 1.0451
=-3.12

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $21.7 Mil.
Revenue was 218.882 + 220.733 + 211.22 + 203.984 = $854.8 Mil.
Gross Profit was 157.047 + 158.377 + 149.142 + 141.567 = $606.1 Mil.
Total Current Assets was $130.1 Mil.
Total Assets was $592.6 Mil.
Property, Plant and Equipment(Net PPE) was $44.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $44.7 Mil.
Selling, General & Admin. Expense(SGA) was $523.3 Mil.
Total Current Liabilities was $179.2 Mil.
Long-Term Debt was $75.3 Mil.
Net Income was 5.518 + 4.588 + 3.588 + 4.207 = $17.9 Mil.
Non Operating Income was 0.036 + -0.013 + -0.033 + -0.015 = $-0.0 Mil.
Cash Flow from Operations was 24.082 + 9.387 + 36.089 + 23.55 = $93.1 Mil.
Accounts Receivable was $23.3 Mil.
Revenue was 204.776 + 209.087 + 213.711 + 207.584 = $835.2 Mil.
Gross Profit was 142.032 + 145.028 + 147.329 + 141.895 = $576.3 Mil.
Total Current Assets was $178.3 Mil.
Total Assets was $547.0 Mil.
Property, Plant and Equipment(Net PPE) was $56.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $32.3 Mil.
Selling, General & Admin. Expense(SGA) was $460.7 Mil.
Total Current Liabilities was $178.0 Mil.
Long-Term Debt was $46.7 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(21.705 / 854.819) / (23.296 / 835.158)
=0.02539134 / 0.02789412
=0.9103

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(158.377 / 835.158) / (157.047 / 854.819)
=0.69002991 / 0.70907759
=0.9731

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (130.135 + 44.83) / 592.645) / (1 - (178.297 + 56.436) / 547.03)
=0.70477267 / 0.57089556
=1.2345

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=854.819 / 835.158
=1.0235

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(32.342 / (32.342 + 56.436)) / (44.683 / (44.683 + 44.83))
=0.36430197 / 0.49917889
=0.7298

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(523.253 / 854.819) / (460.689 / 835.158)
=0.6121214 / 0.55161898
=1.1097

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((75.252 + 179.208) / 592.645) / ((46.704 + 178.043) / 547.03)
=0.42936328 / 0.4108495
=1.0451

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(17.901 - -0.025 - 93.108) / 592.645
=-0.1269

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Vonage Holdings Corp has a M-score of -3.12 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Vonage Holdings Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.72681.10840.89120.80990.86121.01481.19451.17150.9857
GMI 0.8781.0160.84320.950.97221.02740.97150.99980.977
AQI 2.53730.83673.2811.49660.98070.61972.9950.90571.1338
SGI 3.37732.25631.36361.08680.98770.99550.98340.97560.9764
DEPI 2.0840.59820.64170.76760.8650.95231.13870.99360.8694
SGAI 1.11990.71040.8570.68150.90440.891.02121.06211.1017
LVGI 2.6250.7811.43771.12751.06821.19730.31630.87971.1523
TATA -0.1593-0.19730.0081-0.1108-0.1018-0.56640.4862-0.152-0.0931
M-score -1.23-2.17-1.54-2.94-3.14-5.310.99-3.07-2.99

Vonage Holdings Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.06061.0981.29171.17151.27981.24171.00360.98570.94720.9103
GMI 0.98260.99741.00230.99980.98830.9810.97970.9770.97710.9731
AQI 3.11732.72442.45230.90570.87320.91910.96831.13381.23251.2345
SGI 0.9880.98870.97570.97560.97220.97110.9770.97640.99811.0235
DEPI 1.15331.06170.98560.99360.96510.99460.8220.86940.79050.7298
SGAI 1.03981.04381.05321.06211.04611.05591.07741.10171.1261.1097
LVGI 0.30820.31880.31610.87970.95870.98631.04081.15231.04711.0451
TATA 0.48710.47530.5149-0.152-0.1506-0.1119-0.1413-0.0931-0.1139-0.1269
M-score 0.930.740.98-3.07-3.01-2.86-3.23-2.99-3.04-3.12
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